By Carol D. Leonnig and Alice Crites
Washington Post Staff Writers
Friday, June 5, 2009
CROYLE TOWNSHIP, Pa. -- Inside the LBK Ranch, a private game preserve on a scenic hilltop here, guests mingle at a stone lodge after hunting deer and wild boar. Signs posted at intervals along the fence warn: "No Trespassing: U.S. Govt. Testing Facility."
Defense firm owner Bill Kuchera and his wife, Lena, the owners of the 161-acre property, live in an upscale log home within the preserve and go to extensive efforts to keep out strangers. There are no visible signs of government testing, but behind the 10-foot fence and electronic gate lies the answer to a politically sensitive question now under federal scrutiny: whether Kuchera's companies padded their Pentagon billings and diverted taxpayer money to their own pet projects.
In January, federal agents raided the ranch, along with the homes of Bill Kuchera and his younger brother Ron and the offices of two Kuchera companies. Federal authorities are investigating tips from company insiders suggesting that taxpayers were billed improperly for Kuchera family expenses and ranch renovations, according to sources familiar with the probe. Tens of millions of dollars in Defense Department contracts have flowed to Kuchera's companies because of the local congressman, Democratic Rep. John P. Murtha, the chairman of the House Appropriations defense subcommittee. The Navy recently suspended the company from future contracts while the investigation proceeds.
Murtha, who was celebrated at the LBK Ranch with a fundraiser held in his honor, last week sidestepped questions about $50 million in earmarked funds and contracts he has helped direct to Kuchera Defense Systems and Kuchera Industries Inc. since 2001. But newly obtained documents and interviews show that the current federal investigation is only the latest chapter in the troubled history of the Kuchera brothers' business ventures.
The Kucheras have a complicated family history that involves drug-running and a family feud that left the brothers in control of the companies. Over time they became affluent and respected defense contractors in their home town near Johnstown, Pa.
Before Bill Kuchera produced electronics and robotic equipment for the Pentagon, he helped run thousands of pounds of marijuana and some cocaine from Miami to sell in Racine, Wis., according to criminal records and accounts of others involved in the drug operation. Bill Kuchera pleaded guilty to a single and lesser felony distribution charge in 1982 after cooperating witnesses implicated other Kuchera family members in helping store drugs at the family home. Ron Kuchera and the boys' parents were never prosecuted.
Bill and Ron Kuchera's uncle, Michael Kuchera, the founder of the original Kuchera Industries Inc., told The Washington Post that his nephews tricked him into selling the business to a shell corporation they secretly controlled.
Dennis McGlynn, an attorney for the Kuchera brothers, said he thought Michael Kuchera knew he was selling the business to his nephews, whom McGlynn said he represented in the sale. He said the Kuchera companies are appealing the Navy's suspension and he has no evidence of improper billing. He declined to comment on other questions.
"In defense of Bill and Ron, these people have hired-top notch engineers, computer techs and line people," McGlynn said. "They produce excellent products. I am certain that all of the general contractors who use KDS will tell you that their work is unparalleled."
Murtha, through a spokesman, declined to comment.
Known as "Billy" and "Ronnie" to friends, the Kucheras grew up in Racine but tried several times to make a living in their family's native Cambria County, Pa. In the mid-1970s, Bill Kuchera ran a bar near Johnstown, and his uncle Mike ran an electronics supply store.
After the 1977 Johnstown flood, both family enterprises were wiped out by the town's economic downturn. The uncle tried to rebuild slowly. Bill and Ron Kuchera moved back to Racine, where Bill sold fireworks imported from the South.
Childhood friend Peter Whorley suggested to Bill that he could make more if they teamed up to run marijuana from Miami, according to court and criminal records.
Business was lucrative until Whorley and Bill Kuchera were arrested in 1981, Wisconsin criminal records show. They were sentenced to several years in federal prison. Kuchera served 11 months.
After his release, Bill Kuchera struggled to run a small corner grocery in Racine. In 1985, he asked his uncle Mike for a job with Kuchera Industries, or KII, which then built electronic circuit boards.
"He said, 'I want to make a fresh start,' " Michael Kuchera said. "He was family, and I wanted to help. I made him my full partner: 50-50." The uncle put Bill in charge of running the plant. Ron joined them.
Also fresh out of prison, Whorley provided names of government contracting officials he learned about from fellow prisoners. Whorley said he invested $50,000 in KII for a share of the profits and steered the Kucheras to his contacts at the Census Bureau, where they won federal work.
But Whorley continued selling drugs, earning a 10-year prison sentence with his next federal conviction. He later filed a lawsuit claiming that Bill Kuchera cheated him out of his share of the firm's profits, but it was unsuccessful.
For a long time, business hummed along. But new tensions arose within KII. Michael Kuchera said he grew upset when customers warned him that Bill had paid them cash "gifts" to retain their business. In 1993, Michael Kuchera said, Bill persuaded his uncle to sell the company to a local buyer Bill had found. Months later, Michael Kuchera said he discovered that he actually had signed over his company to an entity controlled by his nephews. He said he consulted a lawyer, who told him there was little he could do.
By 1994, the Kuchera brothers had moved their operations to Windber, Pa., 11 miles east of Johnstown, with hope of winning defense contracts that Murtha said he wanted to bring to the district. They partnered with Hughes Aircraft as part of a Defense Department mentor-protege program. Kuchera Defense Systems qualified as a small, disadvantaged business, because it reported that at least 20 percent of its employees were disabled, meeting the government's standard. Raytheon became Kuchera Defense Systems' mentor after it acquired Hughes, a partnership that Murtha's office said the lawmaker encouraged.
"Without Raytheon and without Congressman Murtha, there would be no Kuchera Defense," Bill Kuchera said in a 2000 interview.
Kuchera also hired a high-powered lobbying firm, Ervin Technical Associates, whose chairman is longtime Murtha friend and former congressman Joseph M. McDade (R-Pa.). Kuchera employees and their spouses have donated more than $106,000 to Murtha's political action and campaign committees.
The first mentorship contract -- $5 million in 1994 -- called for KDS and three other companies to produce missile and communication systems components for Hughes. Work volume grew each year. In 2002, Raytheon gave Kuchera a $41 million, five-year Navy contract to assemble surface search radar systems to spot ships, part of a Murtha-supported earmark. In 2006, Murtha announced that Northrop Grumman, Raytheon, Coherent Systems and the Air Force would give Kuchera five contracts worth $7 million in just the first year. Much of the work was new to the company.
"These contracts involve new programs for Kuchera, which further diversifies their work load across various programs," Murtha said in a statement.
Last year, Murtha announced that Raytheon's missile division would give the company a $25.7 million contract to manufacture telemetry units for an air-to-air missile and $1 million for additional engineering and design work. Today, the company's long-term military contracts could be worth more than $100 million over the next decade. Defense investigators have asked Raytheon for Kuchera invoices, according to sources. Raytheon spokesman Anne Marie Squeo said in a statement that Raytheon is complying with all its requirements under federal contracting regulations.
Last year, acting on tips from people with information about company operations, investigators began scrutinizing Kuchera's billing and whether federal funds had been used improperly, including for renovations and laptops. The investigators also are looking into invoices submitted by corporations run by Kuchera family members and friends, one source said.
In the raid of the ranch, federal investigators confiscated nine guns, Bill Kuchera's rifles and shotguns. While the Defense Department had signed off on the executive controlling tens of millions of dollars in defense work, his felony conviction made it illegal for him to possess a firearm.
On a recent visit, two scowling employees on an all-terrain vehicle zoomed out to the property perimeter to monitor reporters who stood outside the ranch fence to get a look inside.